You have estimated spot rates as follows: r₁ = 5.00%,r₂ = 5.40%,13 = 5.70%,14 = 5.90%,15 = 6.00%. a. What are the discount factors for each date (i.e., the present value of $1 paid in year 1)? b. Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (1) 5%, two-year bond; (2) 5%, five-year bond; and (3) 10%, five-year bond. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (i) 5%, two-year bond; (ii) 5%, five-year bond; and (iii) 10%, five-year bond. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b-i. 5%, two-year bond b-ii. 5%, five-year bond b-iii. 10%, five-year bond $ Present Value 47.60 X
You have estimated spot rates as follows: r₁ = 5.00%,r₂ = 5.40%,13 = 5.70%,14 = 5.90%,15 = 6.00%. a. What are the discount factors for each date (i.e., the present value of $1 paid in year 1)? b. Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (1) 5%, two-year bond; (2) 5%, five-year bond; and (3) 10%, five-year bond. Complete this question by entering your answers in the tabs below. Required A Required B Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (i) 5%, two-year bond; (ii) 5%, five-year bond; and (iii) 10%, five-year bond. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b-i. 5%, two-year bond b-ii. 5%, five-year bond b-iii. 10%, five-year bond $ Present Value 47.60 X
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have estimated spot rates as follows:
r₁ = 5.00%,r₂ = 5.40%,r3 = 5.70%,r4 = 5.90%,15
a. What are the discount factors for each date (i.e., the present value of $1 paid in year t)?
b. Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (1) 5%, two-year bond; (2) 5%, five-year
bond; and (3) 10%, five-year bond.
Complete this question by entering your answers in the tabs below.
Required A Required B
Calculate the PV of the following $1,000 bonds assuming annual coupons and maturity of: (i) 5%, two-year bond; (ii) 5%,
five-year bond; and (iii) 10%, five-year bond.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
b-i. 5%, two-year bond
b-ii. 5%, five-year bond
b-iii. 10%, five-year bond
$
Present
Value
47.60 X
= 6.00%.
X
< Required A
Required B
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